Dead Empires: How China May Overtake the U.S.

By Polly Cleveland

“The earth is the tomb of dead empires, no less than of dead men.” Thus wrote the American economist and journalist Henry George in his 1879 worldwide bestseller, Progress and Poverty. Adam Smith had identified cooperation and specialization—“the division of labor”—as the forces that generated economic growth and prosperity. George claimed that those same forces led eventually to collapse, as monopolization of land and other natural resources directed more and more wealth into ever fewer hands. (George was nonetheless an optimist; he argued for heavy taxes on wealth and checks on monopoly—causes vigorously taken up by Progressive reformers in the early twentieth century.)

When George first wrote, the sun never set on Queen Victoria’s Empire, and looked like it never would. Yet twenty years later the British Empire was visibly faltering, plagued by bankruptcies of investments in U.S. railroads, the failure of obsolete industries, and the quagmire Boer War in South Africa. New rivals—the United States, Germany, and Russia—peered over the horizon.

Two astute observers have recently offered complementary predictions of the imminent demise of the American empire, and its replacement by China. One is historian Alfred McCoy of the University of Wisconsin, and the other is investigative journalist Barry Lynn of New America.

In The Geopolitics of American Global Decline: Washington Versus China in the Twenty-First Century, McCoy describes the Chinese strategy to break through the encircling ring of American bases to reach—and control—its markets and resources directly. As U.S. officialdom has already noted with some alarm, China is aggressively seeking to assert dominion over the South China Sea between it and Japan and the Philippines. It has been dredging landfill to create airbases on the unoccupied Spratley Islands, and has demanded that U.S. and other aircraft overflying the area obtain Chinese permission. But that’s just the eastern end. McCoy presents maps showing China’s massive investments in infrastructure to link it westward overland to the rest of the great Eurasian heartland. While U.S. railroads and bridges crumble, the Chinese are building a dense internal network of sophisticated high-speed high-volume railroads, plus oil and gas pipelines. These will connect up with transcontinental railways and pipelines, crossing Kazakhstan, reaching Moscow, and from there to Hamburg, Germany on the Baltic Sea. Another corridor will connect through Pakistan to the Arabian Sea, and yet another across Myanmar to the Indian Ocean. Meanwhile, the Chinese are making huge collaborative investments with these neighbors and with willing partners in Africa and Latin America. McCoy sees the TPP as Obama’s last-ditch effort to contain China.

For years, Barry Lynn has reported on the growing power—and weakness—of multinational monopolies. The power is more obvious: higher prices, less choice, less innovation—and greater political influence. The weakness is less obvious: less investment, fewer jobs, lower wages, and restriction of manufacturing to dependence on a small number of cheap, mostly foreign suppliers.

Here’s where China comes in, as Lynn reports in The New China Syndrome: American business meets its new master. Multinational businesses, like the auto companies and computer companies, increasingly depend on China both for cheap manufacturing and for access to the growing Chinese consumer market. Lynn reports a number of instances where Chinese have intimidated multinationals into concessions on price, or ownership shares, or jobs for children of Chinese leaders. He describes an episode in which bureaucrats summoned in-house lawyers from some thirty companies, including GE, IBM, Intel, Microsoft, Siemens, and Samsung, told them that half the companies were under investigation for monopoly crimes—without saying which—and  instructed them write public “self-criticisms” under threat of double or triple fines should they refuse. The great monopolies must submit to this arbitrary tyranny precisely because they have destroyed so many other sources of supply, and have so eroded consumer markets in the rest of the world.

Bill Clinton saw U.S. investment in China as a way to “a more open and free China.” What if, Lynn asks, “the extreme economic interdependence between the United States and China is not actually carrying our values into a backward and benighted realm, but accomplishing precisely the opposite — granting the Chinese Politburo ever-increasing leverage over America’s economic and political life?” And, one might add, leverage over all the other multinational host countries? That could hardly have been more obvious than in the obsequious reception given to President Xi Jinping on his recent state visit to Great Britain. The meeting sealed a series of business investments, including a deal in which Chinese investors take a one-third stake in Hinkley Point C, Great Britain’s first new nuclear plant in a generation.

So, on the one hand, as Alfred McCoy suggests, Chinese infrastructure investment and joint ventures in foreign countries increasingly constrain U.S. power from the outside. On the other, as Barry Lynn suggests, Chinese control of multinational corporations threatens U.S. power from the inside. After the British Empire collapsed in the bloodbath of World War I, it staggered on a few more years as a zombie agent of the growing American empire. (See Middle East.) That empire may in turn stagger on as the zombie agent, not of a western democracy, but of a giant nation contemptuous of our values—and with thousands of years’ experience managing empires.

Tuesday Links: TPP, Corbyn, Sanders, etc.

Off Guardian (embedded above), Tony Benn speech on the aims of Thatcherite policies.  Via Gaius Publius, via Naked Capitalism, where they are calling it Tony Benn’s “Ten-Minute History of Neoliberalism.” I found it moving, especially his remarks about Thatcher’s demonization of the miners, and that he’d concluded that these fights have to be re-fought each generation. (More on miners below.)


Gaius Publius, What Sanders Can Accomplish by Not ActingThe blogger known as Gaius Publius (the blog is “Down With Tyranny”) has had a series of posts in support of Bernie Sanders that have been picked up at Naked Capitalism. I don’t like the fact that Sanders is running as a Democrat, and I’m sympathetic with the argument (made well by Margaret Kimberley of Black Agenda Report in this Counterpunch podcast interview) that Sanders will thereby be acting as a “sheepdog” bringing left-ish Democrats into the fold and eventually to vote for Hillary or whoever the nominee is).  But I liked this post, which suggests that Bernie could get some traction by promising not to do a bunch of things that Obama has done: push for horrible “trade” deals like the TPP; aim for dismantling or privatizing Social Security; extend tax breaks for the rich; etc. etc. And GP asks us to think of all the time activists wouldn’t then have to spend fighting such efforts.  Our columnist Jerry Friedman will have an “Economy in Numbers” piece in our Nov/Dec issue about Sanders’ economic policies.

Social Europe, Jeremy Corbyn’s Speech On The EU ReferendumMore sensible talk from the new Labour Party leader.  Attempts in the UK press to undermine Corbyn reached a low when the Sunday Express had this dire report (via HuffPo Uk): Jeremy Corbyn’s Great Great Grandfather Mismanaged A Victorian Workhouse, Sunday Express Claims.  Bernie Sanders doesn’t have it so bad; here the New York Times annoyed Bernie fans with an online piece about the few times Bernie had been mentioned in the Times before he was a public figure, starting with coming in 15th in a high school running race (1956: Bernie Sanders, Running Hard).  Besides the triviality and condescension, the original version of the article had young Bernie coming in dead last, when in fact he was just the last among those ranked to get their names in the paper; his time was apparently pretty good.

Lambert Strether, Naked Capitalism, TPP: It’s Not a Deal, It’s Not a Trade Deal, and It’s Not a Done DealHat-tip TM.  I hope he’s right that this can be turned back; he is definitely right that the done-ness of the deal has been wildly over-reported. See also: Joseph Stiglitz and Adam Hersh, The Trans-Pacific Free-Trade Charade;  Robert Reich video, The Problem with TPP Explained in Two Minutes; and our own John Miller’s piece from our July/August issue, The Trans-Pacific Partnership: Corporate Power Unbound.

Bitch Media, Four Things the Government Should Defund Instead of Planned Parenthood. Including “crisis pregnancy centers,” which get funding in at least eleven states.

Washington Post, How Elizabeth Warren picked a fight with Brookings — and won;  Reuters, Brookings fellow resigns after Senator Warren accuses him of conflicts:  Warren criticized a Brookings affiliate, Robert Litan, for writing a white paper against the Labor Dept.’s proposed fiduciary rule, which would require personal investment advisors to act in their clients’ interests; the guy hadn’t disclosed the finance industry funding he’d gotten for the study. As reported a while back at Naked Capitalism (Congressional Black Caucus Still Trying to Hurt Their Constituents By Killing the Labor Department Fiduciary Rule) and in Mother Jones (The Congressional Black Caucus and the Financial Lobby: BFFs), members of the Congressional Black Caucus have been opposing the fiduciary rule, for some reason. I guess for campaign money, but it’s still pretty shocking. Their argument is that less-well-off Black people will have less access to financial advice if the rule goes through–but why should they want advice that is compromised?

The Independent (Ireland): Imagine this: Sweden moves towards a standard 6-hour working day and The Independent (UK): Sweden introduces six-hour workday.  This supposedly makes workers more efficient (but whatever reason they need to give themselves…).  Hat-tip D&S reader Katharine R.

Center for Public Integrity, Johns Hopkins terminates black lung program: This was a unit of the Johns Hopkins Hospital that, in collusion with coal companies, repeatedly failed to diagnose miners with black lung disease, preventing them from getting disability.  Appears to be a result of an expose by the Center for Public Integrity and ABC News, Breathless and Burdened. Will heads roll?

Too Much online, The Real Secrets to Grand Fortune: Sam Pizzigati interviews Sam Wilkin, author of Wealth Secrets of the One Percent: A Modern Manual to Getting Marvelously, Obscenely Rich, which ingeniously parodies get-rich self-help books as a way of explaining how, via monopoly and intellectual property protection (among other tricks) the super-rich really got their wealth.  I ordered the book.